Insider-privatisation is, due to the political influence of incumbent managers and workers, the predominant form of privatisation in many transition economies. The model argues that while insider-privatisation often provides better managerial incentives, reform governments may not always wish to...

We investigate the privatization decision of a government whose objectives are to preserve jobs and to stabilize its budget. The firm considered needs restructuring, i.e. some funds must be provided and the manager must undertake an effort to reorganize the firm. If the productivity of the...